MORE encouraging signs are emerging that suggest the Welsh economy is beginning to stage a recovery from recession.

The latest Wales Purchasing Managers’ Index report from the Chartered Institute of Purchasing and Supply says the private sector continued to grow last month albeit at a weakening rate.

Business activity at firms in Wales rose for the eighth month running in December, but expansion was driven by manufacturing as services activity declined.

The headline seasonally adjusted Business Activity Index was 54.6, down from November’s 55.1.

Private sector employment in Wales fell slightly last month, reflecting a sharper pace of job shedding in services, as manufacturers took on more staff.

Trevor Balchin, senior economist at Markit, who carried out the survey, said: “The December survey findings provide further encouragement that the Welsh economy was recovering towards the end of last year, although the effects of the manufacturing-led rebound experienced in the third quarter continued to soften.

“The activity and new business indexes both remained above their historic averages and signalled solid growth, although Wales was no longer among of the top-performing UK regions.”

But another business survey claims the UK economy is struggling to mount a recovery amid a “disturbing weakness” in the services sector.

The British Chambers of Commerce (BCC) said that the results of its research indicated the economy was “on the brink of leaving recession”, but said it did not see any significant growth in the fourth quarter of 2009.

The survey suggests that both sales and orders within the UK were below expectations and the crucial services sector performed worse than manufacturing in the period.

“The results reveal disturbing weakness facing the service sector; these must be remedied to enable the UK to attain a sustainable recovery,” it said.

Meanwhile there is a boost for the high street as figures reveal that Christmas sales were better than retailers had hoped for.

The British Retail Consortium said retailers enjoyed their best December growth for eight years as like-for-like sales rose 4.2% by value last month due to a last minute rush and thanks to a return of confidence among recession-weary consumers.